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On January 1, 2009, Monroe, Inc., purchased 10000 shares of Brown Company for $250000, giving Monroe 10 percent ownership of Brown. On January 1, 2010,
On January 1, 2009, Monroe, Inc., purchased 10000 shares of Brown Company for $250000, giving Monroe 10 percent ownership of Brown. On January 1, 2010, Monroe purchased an additional 20000 shares (20 percent) for $590000. This latest purchase gave Monroe the ability to apply significant influence over Brown. The original 10 percent investment was categorized as an available for sale security. Any excess of cost over book value acquired for either investment was attributed solely to goodwill. Brown reports net income and dividends as follows. These amounts are assumed to have occurred evely throughout these years. Net Income Cash Dividends(paid quarterly) 2009350000 100000 2010480000 110000 2011500000 120000 On July 1, 2011, Monroe sells 2000 shares of this investment for $46 per share, thus reducing its interest from 30 to 28 percent. However, the company retains the ability to significantly influence Brown. Using the equity method, what amounts appear in Monroes 2011 income statement
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